JAMA Reacts to FY2006 Government Budget Proposal
Allocation to General Revenue of Tax Funds
Earmarked for Road Improvements Deemed Unacceptable

Itaru Koeda, Chairman

The Japanese government’s budget bill for fiscal year 2006 allocates to general revenue a portion of the tax funds earmarked exclusively for road network improvements, and furthermore calls for the expanded use of those funds. In response, the Japan Automobile Manufacturers Association (JAMA) wishes to go on record with the following comments on what it views as a dubious government decision.

The tax revenue specifically earmarked for roads is generated through taxation imposed on automobile owners from the perspective of “benefits and burdens” and implemented with the purpose of improving the nation’s road network. Moreover, in consideration of the urgency of making such improvements, road network-designated taxes are currently assessed at a provisional rate that is approximately double the standard rate. This is premised on the principle of “no taxation without legal basis,” and with regard to decisions to establish road network-designated taxes, determine or extend provisional tax rates or take other steps, the current strategy was accepted on the basis of case-by-case National Diet deliberations to examine the intent and purpose of introducing each such tax, and followed by the allocation of the revenues thereof to road network improvements.

In keeping with this logic, the stance advocated by JAMA is that the full value of the road network-designated tax revenue should be channelled into road improvements. In the event, however, that the tax revenue collected for this purpose exceeds the actual level of spending on road projects, JAMA maintains that the provisional tax rate should be abolished and that targeted funds should be left in the hands of taxpayers.

Furthermore, the fiscal 2006 budget bill [Ministry of Finance draft] recently announced by the government decrees that, of the taxpayer revenue earmarked exclusively for the nation’s road network, some 47.2 billion yen is to be allocated to general revenue to “retroactively adjust,” according to the government’s explanation, the supply of funds that were designated for road improvements in supplementary national budgets in fiscal 2003 through fiscal 2005. JAMA opposes this move because in reality, it represents nothing more than a pretext for diverting surpluses in road network-designated taxpayer revenue—surpluses which, moreover, were artificially created by the establishment of a spending ceiling—to general revenue, a category obviously far removed in purpose from the road network-designated funds. The decision to shift tax revenue earmarked exclusively for the national road network to general revenue is thus not only objectionable in principle, it also blatantly disregards the needs and wishes of automobile users, and is therefore totally unacceptable to JAMA and the automotive industry in general. Furthermore, as regards the proposed expanded use of this tax revenue, JAMA demands that any such expanded use gain the thorough understanding of taxpayers and be strictly limited to items of which they are fully aware.